Defeat of Production Deduction Reduction Saves Nearly $5 million in Additional Income Tax Payments

Author: Shawn Shouldice Date: July 06, 2010

Legislative leaders in the House of Representatives proposed in the miscellaneous tax bill (H.783), to disallow the pass through of the entire federal domestic manufacturing deduction which would have impacted manufacturing, agriculture and many business entities.

Current tax law allows for a tax reduction of up to 9% for domestic production costs (IRS Section 199) but legislators proposed amendments that would have scaled back that deduction to 6%, making the credit less beneficial to small businesses and manufacturers. This deduction is designed to help protect and grow manufacturing, agriculture and other productive employment in Vermont.


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